MGM Mirage purchased over 30 acres of land next to its Circus Circus hotel on the north end of the Vegas strip back in April. This gave the company over 100 acres of contiguous land in a rapidly developing area of the strip. Rumours were rife that MGM Mirage could be planning to build another resort on the scale of the $7.7 billion Project CityCenter.

However, it was precisely because they were investing so heavily in CityCenter that it was thought that the company wouldn’t begin work on the land until sometime close to CityCenter’s compeltion – in other words, sometime in 2009.

This being Vegas, though, things tend to happen rather quickly, and MGM Mirage have now announced a deal with Kerzner International Holdings that will see the development of a multi-billion dollar “integrated resort property” on this area of land, which should being construction a lot sooner than 2009.

Kerzner are the people behind the fabulous-looking Atlantis, Pardise Island hotel in the Bahamas, and so with this latest news, rumours are abound that new Las Vegas resort could be a Las Vegas Atlantis right next to Circus Circus – just without the sea and the ships!

Full details of MGM Mirage and Kerzner’s announcement after the jump.
From the press release:

MGM MIRAGE (NYSE: MGM) and Kerzner International Holdings Limited (“Kerzner” or “Kerzner International”) announced today that the companies have entered into a letter of intent to form a 50/50 joint venture to develop a multi-billion dollar integrated resort property on the Las Vegas Strip. The parties plan to enter into immediate negotiations with a view to concluding a definitive agreement in the third quarter of 2007.

The new resort will be designed for approximately 40 of the 78 acres of land owned by MGM MIRAGE, located on the corner of Las Vegas Boulevard and Sahara Avenue. Kerzner will lead the planning and conceptualization of this project. The joint venture is expected to draw upon MGM MIRAGE’s substantial presence and experience in Las Vegas and Kerzner’s experience in developing and operating some of the world’s most recognized and successful destination resorts.

“We see this type of relationship as a major part of our company’s future,” said Terry Lanni, Chairman and CEO of MGM MIRAGE. “Our considerable real estate holdings, combined with our experience and efficiencies in developing major entertainment resort properties, are unmatched. We believe this joint venture could well serve as a model for similar transactions which we think could further enhance shareholder value by accelerating growth and conserving our capital, allowing us to pursue other growth opportunities and/or return excess capital to our shareholders.”

Sol Kerzner, Chairman and CEO of Kerzner International, observed: “We have studied the Las Vegas market for some time and believe this is an outstanding opportunity to create one of the most innovative and exciting destination resorts in the world. We are delighted to join forces with MGM MIRAGE.”

Under the terms of the agreement, MGM MIRAGE will provide the land for the resort and Kerzner International and one of its financial partners will provide cash equity, such that each party owns 50 percent of the project. The land being contributed by MGM MIRAGE is being valued at $20 million per acre. The new integrated resort complex is anticipated to be a multi-billion dollar project and will be financed through equity contributions and third-party debt financing.

The broad conceptual design direction of the new resort has been agreed by the parties and design and planning is expected to take approximately one year to complete. Upon completion of the design phase, both parties anticipate a three year construction period. The as-yet unnamed resort project may utilize existing brands owned by either MGM MIRAGE or Kerzner International, or a new brand will be introduced.

“This is an exciting opportunity for our company,” said Jim Murren, President, CFO and Treasurer of MGM MIRAGE. “This is a prime location in the heart of a rapidly developing area of the Las Vegas Strip. Partnering with a highly respected global resort operator on such a prime piece of Las Vegas real estate will certainly result in a spectacular project. This resort will further enhance the Las Vegas tourist experience and drive incremental visitors to the Strip. This development will further elevate the value of our surrounding land holdings and assets.”